Housing market: Boise, Denver and Salt Lake City report housing price declines

Once again, a western city has seen the largest share of home sellers in the country cut their asking prices.

In May, it was Provo, Utah. In June? Boise, Idaho.

This is according to the latest data from red fin, which shows that nearly two-thirds — 61.5% — of homes for sale in Boise, Idaho, saw a price drop in June. This is the highest share of the 97 metropolitan areas included in the national real estate brokerage analysis.

Another western city, Denver, took second place in the city rankings with the highest share of homes that saw their prices drop, at 55.1%. Next in slot No. 3 is Salt Lake City – which saw a 51.6% share of homes with requested price drops.

What about housing in the West?

The common denominator of all these cities? They are all in the West where housing markets have boomed, particularly in the past two years after the COVID-19 pandemic sent the national housing market into a frenzy.

This rush had an outsized impact on the West, in particular, where the cost of living and housing was considerably more affordable than big cities like California and New York.

Redfin notes this in its report released Thursday.

“Boise, Salt Lake City, Sacramento and Tampa were popular during the pandemic, with homebuyers coming from expensive coastal employment hubs, taking advantage of low mortgage rates and remote working. Their popularity has led to fierce competition for a limited supply of homes for sale, driving up prices and making them unaffordable for many buyers.

Utah – one of the fastest growing states in the country – was already facing a housing shortage before the COVID-19 pandemic hit, so prices were already climbing. The pandemic has only accelerated the growth in house prices.

As the West has become an attractive destination for Americans freed up by remote work, demand has further exploded, resulting in double-digit annual price increases that have worsened to more than 50%, even 60% , In certain regions.

“In Boise, for example, the typical home sold for $550,000 in May, up more than 60% from two years earlier,” Redfin’s report said.

Now, as the Federal Reserve continues to fight inflation, rising interest rates are taking their toll, especially in states like Idaho and Utah. The price declines seen in May and June are the first signs that sellers are grappling with this new reality – that buyers have a breaking point.

“Home sellers face a rapidly changing market, especially in places where they are used to their neighbors’ homes receiving multiple offers and selling for more than the asking price,” said senior economist Sheharyar Bokhari. at Redfin.

“Higher mortgage rates and a potential recession are causing potential buyers in popular migration destinations to press the pause button, and they’re also having a big impact on workers in major job centers who are relying on their wallets. actions for installments,” Bokhari said. .

Other cities also saw a higher share of homes with price drops in June. Tacoma, Wash., saw 49.5%; Grand Rapids, Michigan, saw 49.3%; Sacramento saw 48.7%; Seattle saw 46.3%; and Portland, Oregon, saw 45.7%.

Shoppers in places like Denver, Seattle and Portland may feel apprehensive due to a faltering economy and failing stock market, notes Bokhari. “Sellers are adjusting their expectations in real time as they realize they might not get the price their neighbor got two months ago.”

However, if demand hits a “plateau” over the next few months, price drops may become less common as sellers get a better sense of the market and set prices at more realistic levels to begin with, Bokhari said. . “But if demand falls further, sellers will continue to catch up and lower prices to attract buyers.”

Is it too late to sell?

As the market cools, have the sellers missed their chance to sell high? Maybe so, economists and Redfin officials said. They advise sellers to list homes sooner rather than laterpredicting that price growth will likely slow for the rest of the year.

“Sellers today feel like they’ve missed out on the hot seller’s market, and in some ways they have,” said Andy Potarf, a Redfin real estate agent in Denver. “They probably won’t get multiple offers and sell their house way above the asking price, but we can still sell a house for a fair price.”

It is important to note that monthly listing price drops are not the same as a price drop or an actual drop in The trajectory of Utah home prices, which is on the rise since the 2006 U.S. housing market busted and bottomed in 2009.

Experts said it would likely take a drastic economic shift — massive layoffs, foreclosures and a dismal job market — to dramatically disrupt the trajectory of Utah housing prices and send prices plummeting nationwide. the state.

And price reductions aren’t unusual – in fact, it’s common for sellers, especially motivated sellers, to reduce their listing price if they think their original listing price may have been too high. to be competitive with other ads.

However, if a regional market sees drastic price drops, “it usually means things are starting to calm down,” as Fortune put it on recently. “That’s exactly what we’re seeing right now.”

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Sandy A. Greer